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captioning sponsored by macneil/lehrer productions >> brown: the chief investment officer at j.p. morgan chase retired today, the first casualty after the bank announced a $2 billion loss last week. good evening. i'm jeffrey brown. >> woodruff: and i'm judy woodruff. on the newshour tonight, margaret warner gets the latest on the trade deal gone wrong, and what comes next for the banking giant. >> brown: plus, we talk with two senators about the prospects for increased regulation: michigan democrat carl levin and tennessee republican bob corker. >> woodruff: ray suarez updates the escalating drug violence in mexico after 49 mutilated bodies were found dumped along a highway.
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>> brown: john merrow reports on a move to boost reading skills and shake up the content for young readers. >> reporter: the new view is that our kids read too much fiction, books like this, and not enough about things like electricity, whales and the solar system. >> woodruff: and two economists offer their prescription for addressing what they call the human disaster of long-term joblessness. >> brown: that's all ahead on tonight's newshour. major funding for the pbs newshour has been provided by: >> citi turns 200 this year. in that time, there have been some good days and some difficult ones. but through it all, we persevered. supporting some of the biggest ideas in modern history. so why should our anniversary matter to you? because for 200 years, we've been helping ideas move from ambition to achievement. and the next great idea could be yours.
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>> by nordic naturals. and the william and flora hewlett foundation, working to solve social and environmental problems at home and around the world. and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> brown: banking giant j.p. morgan chase announced the departure today of a top investment officer after a huge and highly publicized trading loss. just before u.s. markets opened, c.e.o. jamie dimon disclosed the retirement of longtime executive ina drew. she oversaw a london-based unit that lost at least $2 billion in
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trades and bets tied to corporate bonds and credit. the case has reignited the debate over financial regulation, and the bank itself has lost nearly 13% of its stock value in two days. margaret warner has more on the story. >> warner: ina drew is the most prominent executive to leave j.p. morgan over the losses so far. but other departures are expected, and questions are mounting about the bank. for more, i'm joined by dawn kopecki. she covers j.p. morgan and banking for bloomberg news. she joins us from tampa, where the j.p. morgan annual shareholder meeting kicks off tomorrow. dawn, thanks for joining us. explain a little more for us, ina drew, how central a role she played in all of this. and are our departures expected? >> she didn't necessarily have a central role in conducting the trades or the positions that the bank had, that lost all the money.
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but she was the person that oversaw this office. the office in london that was so problematic for j.p. morgan reported up to drew. apparently drew had no idea what was going on or how bad things were. in fact, when the bank first started discovering how bad the losses were, she initially argued to try to keep the hedge on so that the bank could maybe see if it could wait it out a little bit. but that was based on wrong information because the lond often office just wasn't giving her all of the facts. >> warner: what about the people who actually ran the london office, who were conducting these trades including the so-called london whale, the trader who actually took these huge positions betting on credit indices or something like that. >> the london whale, who is also known as baltimore, his name is bruno icksal. so far what we know is he has not lost his job. it's unclear and may even be unlikely that he does. he was following the orders of
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a man named mackris which some kind ironic that his name is akill he's. he's greek. macris ordered these trades, ordered this complicated set of derivatives that j.p. morgan is blaming on its loss. akill he's is transitioning out of his duties. they're keeping him on to help find the dead bodies. they need him there to try to explain what happened. but he's lost all trading responsibilities. he's lost all day-to-day management responsibilities. they came in today. they named a new head of the chief investment office. he cleaned house today. named a whole new slate of people to run that office. they've been put in place immediately. >> warner: what about ceo jamie dimon's involvement here. you had an interesting story on this morning that he actually helped push this unit to become edgeier, to take, if not take more risk....
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>> he did. >> warner: explain that. would you? >> yes. jamie dimon was at bank one. they were acquired by j.p. morgan in 2004. jamie came to the... he came to become ceo of the entire bank. about that time, he promoted ina drew and gave her more freedom to invest in different types of products. generally the chief investment office generally invests in very safe things like u.s. treasury bills. maybe some mortgage assets. generally agency debt. those are all considered safe havens among investors. they don't make a lot of money but they don't tend to lose money either. he expanded that portfolio and gave her a mandate to also make profit. this is a very controversial subject being debated right now in d.c. because last year or two years ago lawmakers passed what is called the volcker rule which prohibits
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banks from using their deposits to invest in complicated things that are designed only to make money. lawmakers want banks to get back to the business, the traditional business of banking and use those funds to hedge their risks. >> warner: we're going to hear from a couple of the lawmakers right after this. now you're down at the shareholder meeting which i guess bad timing for j.p. morgan's management begins tomorrow. what's the buzz? he's expected to speak, isn't he? is there any kind of shareholder unhappiness, revolt brewing? >> you know, we haven't heard from the big mutual funds that are the biggest shareholders, but there is a lot of very irate, you know, mom-and-pop investors. i've gotten dozens of emails from people who are apoplectic over this. generally these shareholders meetings are an opportunity for regular people like you and i to go and voice our
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concerns. a lot of activists use these moments to be able to protest the company as well. so you can expect to see some fireworks tomorrow. as well, we'll get the results of some votes on compensation and on splitting the chairman and ceo that may be interesting although a lot of those votes were probably already done weeks ago. but it will be interesting to see how those votes come out tomorrow and what the investors have to say to jamie dimon as well as his reaction. >> warner: finally, you cover these big banks more broadly. what are you hearing from them? is there some concern on the street that a new spotlight is going on them? do they have similar units? >> you know, there are. what i think the concern is among other banks is that regulators are going to be harder on them. we're already hearing that regulators are stepping up their scrutiny of banks.
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a lot of banks do have these types of investments. they may have them structured a different way or in a different division. but a lot of banks do make these kinds of investments. regulators are looking at them a lot more closely. this is a huge public embarrassment for j.p. morgan but it's also a public embarrassment for the industry because they've all been lobbying against these rules. so this comes at an extreme inopportune time for the industry when they've been trying to get regulators to trust them to say, you know, look, we know what we're doing. we're making all safe bets here when, in fact, you know, j.p. morgan... their senior managers, jamie dimon included, had no idea what was going on in london. they had no idea how bad it was. in fact, it could get a lot worse before it gets better. >> warner: i've read that there could be further losses. dawn coe pecky of bloomberg news, thank you. >> thank you. >> woodruff: coming up, we look at the political fallout after j.p. morgan's big loss.
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also ahead, the mounting violence in mexico's drug war; guidelines for reading standards; and the problem of unemployment long-term. but first, the other news of the day. here's hari sreenivasan. >> sreenivasan: rival party leaders in greece began a last- ditch effort today to form a new government. and european leaders faced the growing possibility that greece's days in the euro-zone might be numbered, if it rejects austerity measures. we have a report from martin geissler of independent television news. >> reporter: europe's finance ministers are meeting in brussels this evening, short on time and short on options. "i haven't ruled out the possibility of giving the greeks more time," said the german finance minister today. "but we've been helping them for two years now and we're still no closer to resolving the problem." the markets share that concern. prices slumped across the continent and beyond. and the coming days are seen as pivotal. the french president will fly to a meeting with the german chancellor straight from his
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inauguration. he wants to soften her hard line on austerity but analysts can't see that happening. >> you either stick to the terms or you're out. you have to be very tough on the negotiations from the german side at the moment because if you're not you send these messages to everybody else saying, look, you just vote for the other parties and you get better bailout terms. >> reporter: this is uncharted territory. it's not clear europe could kick greece out of the euro even if it wanted to. under european law it's practically impossible for a country to be expelled from the euro. they have to ask. the greeks don't want to do that. theoretically if they default on their debt, brussels could turn off the life support machine, cut all funding to the country until it begs to be released. that wouldn't be an easy or a popular decision to take. there's a glimmer of hope that a last minute deal may be struck, form a coalition government that could help the country limp along for a few months at least. it's a long-term strategy that
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greece and europe need. tonight that looks more distant than ever. >> sreenivasan: the stalemate in greece had wall street worried today. the dow jones industrial average lost 125 points to close at 12,695. the nasdaq fell 31 points to close at 2902. plans to close some 600 post offices have officially been put on hold. until today's decision, the urban and suburban sites had been on a closing list as part of the postal service's bid to cut costs. the announcement follows last week's announcement that hundreds of rural post offices would be spared as well. instead, they will operate on shorter hours. california's fiscal problems have grown even more severe. governor jerry brown announced sunday that the state budget deficit will run nearly $16 billion next year, up sharply from the last estimate. today brown proposed a long list of cuts, including a 5% pay cut for state employees. he is also asking voters to approve increases in sales and income taxes. >> california has been living
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beyond its means. the united states of america and the federal government is living beyond its means. a lot of corporations, a lot of people spend more than they take in. well, there has to be a balance and a day of reckoning. this is a type of day of reckoning. we've got to take the medicine. >> sreenivasan: if voters reject the tax hikes, brown said he will propose automatic reductions in spending for public schools and the university systems. in afghanistan, hundreds of people turned out today to mourn a former taliban leader who became a peace negotiator. he was shot to death on sunday. the honor guard escorted the body of arsala rahmani to the burial. he had reconciled with the government and was active in coordinating talks with afghan insurgents. the taliban has publicly threatened peace negotiators, but it denied responsibility for the rahmani assassination. hundreds of palestinian prisoners in israeli jails have agreed to give up a hunger strike they began a month ago. word of a deal came today,
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mediated by egyptian officials. the prisoners won concessions, including more visits from family members and an end to holding prisoners indefinitely without trial. in return, the israelis said militant groups have pledged to halt violent activities. the last holdout in the republican presidential race, texas congressman ron paul, effectively ended his campaign today. he said he will not be spending any more money. in a statement, paul said, "doing so with any hope of success would take many tens of millions of dollars we simply do not have." the congressman is not expected to endorse mitt romney, the party's presumptive nominee. those are some of the day's major stories. now, back to judy. >> woodruff: we take a second look at the j.p. morgan chase trading mistake, and the potential political impact of the company's $2 billion blunder. >> we know we're better off when there are rules that stop big banks from making bad bets with other people's money. >> woodruff: financial regulation was clearly on the president's mind today. even during his commencement address at barnard college in new york.
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the issue burst back into the spotlight last week after banking giant j.p. morgan chase announced that it lost $2 billion in just six weeks. traveling with the president today, white house press secretary jay carney said this event only reinforces why it was so important to pass wall street reform. why it is so important to fully implement wall street reform. j.p. morgan chase ceo jamie dimon has been a leading opponent of new regulations under the dodd frank law. he spoke sunday on "meet the press" in remarks taped before the bank announced its massive losses. >> i don't like this attitude to blame everybody. if you think something is wrong go get those people who did something wrong and blame them. >> woodruff: the president's republican challenger mitt romney argued earlier this month that the regulations will do more harm than good. >> the small community banks are the ones that have been most hurt because again the burden of regulation falls
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heaviest on the smaller enterprises that don't have the funds and the personnel to follow all the new government regulations. >> woodruff: meanwhile the obama re-election team is trying to tie romney to public discontent with wall street. a new television ad includes interviews with former employees at a kansas city steel mill that romney's private equity firm bane capital acquired. >> they made as much money off it as they could. they closed it down and filed for bankruptcy without any concern for the families or communities. >> woodruff: the romney campaign answered with a web video touting bane's role in another steel company. >> there's a lot of pride in what we've built out here. >> but it almost never got started. when others shyed away, mitt romney's private sector leadership team stepped in. >> building a dream with over
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6,000 employees today. >> woodruff: meanwhile amid the claims and counterclaims, the two campaigns are avidly competing for funds from wall street. according to the center for responseive politics mitt romney has received almost $18 million from the finance, insurance and real estate sector. president obama has received just under $8 million. four years ago he raised $42 million in wall street contributions. carl levin leads the senate sub committee that investigated the financial crisis and tennessee republican bob corker is a member of the senate banking committee. we thank you both. i'm going to start with you senator levin. does this $2 billion and maybe bigger loss by j.p. morgan point to the need for more government regulation? >> you've already adopted the law. it's called dodd frank. we have language in there.
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i actually drafted withson another senator. it's very clear in that law that while you're alloy allowed to hedge, you are not allowed to gamble. the difference between them is that the hedging we specifically allow that banks are permitted to engage in has got to reduce the risk. it's explicit in the law. and what this bank did in this case by their own data is not reduce the risk. they were dramatically increasing the risk by their own data. that is not permitted by our law. we hope that the regulators, when they're writing out the regulations to implement the law, will read our law because we think it's mighty clear. >> woodruff: senator corker, what about that? i mean, j.p. morgan is considered one of the best-run investment banks in the country. the fact that they made an error of this size, does that point to the need for regulation? >> well, as carl and i were talking coming in, this has happened at an interesting
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time because rules are being promulgated. while i agree with senator levin that the intent of the legislation that was passed was to keep proprietary trading from occurring, i think it's questionable as to whether that's actually what's happened. i think we both were talking coming in, this is something we need to have a hearing on and understand. we've been in conversations all weekend with the o.c.c., the office of currency that basically... the examiner in charge that oversees the book of business at j.p. morgan, they've been very adamant that even if the volcker rule which the senator was referring to was fully implemented that this would have been permitted activity. during the course of the day we were just talking they've altered their position and said that this is more complex than they thought and they really want to hold off. the fed has said the same thing, that this is complex and they really don't know. one thing i can say for sure is that i think j.p. morgan has been caught off guard.
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we've been talking with them for some time since this first, this issue first came there and their position on this has evolved as far as what has happened. what i would say, judy, i agree that it needs to be out the window but it's questionable as to what these trades were really about and were they trying to mitigate specific risk. there is language in there that talks about aggregate issues. i think there's more to understand here and more policy to be developed. >> woodruff: it's easy to get lost in the details of all this. would you agree that the volcker rule that limits the kind of trading banks can do might not have prevented this? >> no, the law is very clear. i've got it here with me. it says that you can mitigate risk. you can reduce risk. but if you're going to use the hedging exception, which we wrote into the rule, for proprietary trading, it must be to reduce risk of specific assets. these were never specific.
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it was the entire portfolio which is at issue here. it was a much larger risk than just a specific asset or a specific position. but even more important by their own data, they were not reducing risk with these trades. they were increasing risk in controlling the currency assured me this afternoon that they have not reached any conclusion at the... with that particular agency as to whether or not the rule is clear enough and they've not reached a conclusion as to what the facts were. i read him the law. there's no lack of clarity about the law. you've got to be reducing risk with these trades. that is not what they were doing. >> senator corker, if the argument that i think you're making is that there's a limit to how much more regulation there should be, it's better to err on the side of less regulation, what's to stop.... >> no, i wasn't making that argument. what i was saying is that-- and i think the senator would
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agree-- is that as the rule has come through, there have been some questions about what it actually means. i think he and senator murkly have weighed in. i think there's a lot of weighing in that's taking place with the controller of the currency right now. i think that's impacted things. i'm not saying less regulation. what i'm saying is i think the first thing we need to do, let's understand what's happened fully with this transaction and then let's see if there are policies in place right now that would have mitigated this if it was proprietary trading. and if not, what is it that we should do? no, i'm an open book on this. i actually... we were talking coming in. i think this has happened at a very important time in this evolution. >> woodruff: let me take you then quickly to what governor romney has argued. that is generally for the dismantling of dodd frank which is the financial regulatory reform. if he's elected president.
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if one were to carry that out to a situation where a bank like j.p. morgan were to continue to do this kind of trading and the bank were to be in much worse shape than this bank is, who's going to bail that bank out? what does this lead to? >> look, in any bill that's 2400 pages long there are some redeeming features. one of the things that i spent a tremendous amount of time on with senator warner was the resolution authority where if a bank fails you put them out of business. you have a mechanism to make that happen. i think there are lots of good provisions. this bill began in the very beginning to deal with four very specific pieces of bank regulation. over time it became a christmas tree for all kinds of aspirational goals that were not thought out. and i agree with governor romney that this has been devastating to the community banking system in our country. in other words, this was built around wall street but the negative effect is really on
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the community banks all across our nation that are in small communities that help cause them to have economic growth. no doubt there's a lot of changes that need to happen in the bill. i think even senator levin off camera would agree with me on that. >> i would disagree with you off camera and on camera, as a matter of fact. the idea that governor romney would repeal dodd frank is to me the absolute worst outcome we could have here. if anything proves the need for regulation of wall street to get the... it was that recession where we had banks gambling, making bets, proprietary bets which put them in a very bad position. we had no choice but to bail out banks. we never want to have to bail out these big banks again. that's what the problem is. you have to put some regulation in there to control their risky bets. that's what we did in dodd frank. that's what we did with the
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volcker rule. that's what we did with murphy- leaven. we want to avoid having to bail out banks again. we better fully implement the language that is in this bill not water it down under pressure of wall street. >> woodruff: senator, just to put on footnote on that. in a situation like this where j.p. morgan was using what are apparently highly rated investment grade bonds, that's what they were dealing in. can you write rules that will prevent any kind of trading including in this sort of thing? >> no. they can do the kind of thing that they did up to the point where they are increasing the risk. you cannot under this rule... we wrote this rule-- you cannot add to the risk and call it hedging. hedging is reducing risk. there's an exception in our law for hedging. the effort has been on the part of wall street banks to turn this into a christmas tree where you can use that exception to now swamp the rule and do any darned thing
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you want by calling this an inventory hedge or you're covering your entire group of purchases which could be thousands and thousands of items. you cannot do it. look, this has been resolved. the president signed this bill. the language is clear in this bill. we want the regulators not to be persuaded by wall street lobbyists that they should write this exception to swamp and override the rule. >> woodruff: gentlemen, we have to leave it there. we hope to see you again soon. senator levin, senator corker. >> thank you. >> brown: mexico is again gripped by horrific violence from its five-year-old drug war. ray suarez has the story. >> suarez: the gruesome discovery outside monterey mexico produced the latest casualties in a brutal war between the country's top two drug cartels. >> the bodies show signs that they were transported to the
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site. they carry dir, dust and those sorts of things. >> suarez: 49 bodies, 43 men and six women, were found without heads, hands or feet, making identification difficult. there was little doubt as to the identity of the murderers, a nearby white stone arch way that ordinarily welcomes visitors was spray painted 100% z, a reference to the criminal organization. >> there's no doubt in my mind that organized crime aims to grabs people's attention. most of all the attention from rival gangs. >> suarez: this organization is based out of the eastern gulf coast of mexico were founded by deserters from mexico's special forces. just last week police paraded an assassin linked to the group, a woman, before cameras in monterey. they are engaged in near constant warfare with another cartel which largely controls
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drug smuggling in western mexico. violence has exploded all along the u.s.-mexico border with flash points at the main industry points into the united states like this one across the border from el paso, texas, and one that sits on the rio grande across from laredo texas. the grisly find came 18 days after bodies were found near a popular resort destination. on may 4, nine badly tortured bodies were discovered hanging from a bridge next to a lengthy, profane banner. hours later, 14 dismembered bodies turned up in a van. the heads were found in boxes outside city hall. that atrocity came ahead of a president shl debate last sunday. mexicans head to the polls july 1 to elect a replacement for the president who escalated the war on the
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cartels in 2006. since then, an estimated 50,000 people have died in drug and gang-related violence. for more on all of this, we turn to the president and ceo of one of the largest media print operations in latin america including newspapers in three of mexico's biggest cities. his office is in the hometown of monterey site of the latest gruesome killings. at this hour, do authorities have any more idea who the four dozen victims are and why they were killed? >> part of the strategy of dismembering the bodies has to do with making it difficult for the identification. they probably have succeeded. at least for the short term. the identity at this hour is not known. it probably will over time. >> suarez: have these and other killings around mexico touched mexicans beyond those
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with a direct connection to the conflict? if you're not in law enforcement or have relatives, if you're not a journalist who has been targeted or threatened. if you don't have family in politics or in the gangs, are you still being touched by this? >> well, there's a short sightedness to what we are seeing, how people behave or react. because the visible part of the drug cartel war is when two of the cartels are fighting over territorial control. once territorial control is established, then peace sets in. now the cartel, the dominating cartel, can turn to the real business at hand. which is the profitable part of the business which is protection, which is kidnapping, extortion, piracy, contraband, prostitution
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rings. anything that is illegal, they will turn to. the profitability of the drug side of organized crime is actually quite low. compared to what the profitability is in those other areas. >> suarez: you mentioned kidnapping. you're headquartersed in monterey. did you still live there as the city has become ever more dangerous? >> i live there. i work there. my family i have moved away to a safe haven in texas. what i have to do is commute every workday, every workweek from austin to monterey or mexico city, wherever the week takes me. it's a lot easier to protect one person than it is to protect a large family. >> suarez: have you seen monterey which was one of mexico's wealthiest and most advanced cities change as the government's war on the cartels escalated? >> well, you must realize that 10, 11 years ago, we were on the cover of business week and "time" magazine as the next
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hot spot of the world to invest in. hot spot indeed. but of a different nature nowadays. we have had mass killings in casinos. we have discovered mass graves. we've had mass bodies thrown as happened the day before yesterday. we've had inmates killed inside a jail. with baseball bats. 44 the last uprising a few months ago. so there is dysfunction that has set in to the city in the sense. >> suarez: how do you explain that nightmarish level of violence spreading now through many mexican regions not just the northern states coming so close to the united states but not spilling over into it. how come this hasn't involved the u.s. more? >> well, for one thing, there is a lot of armed forces on
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the border of different types. regional, local or federal. so there's a lot of protection on the u.s. side of the border. now the reason it has spread like wild fire is that we have probably something that's closer to social insurrection than actually a drug war per se. we have a lot of evidence of complete families involved in horrendous crimes. a mother doing the cooking with the daughter maintaining the captivity of a man that was kidnapped by the brother-in-law and that was transported by the father. now how can one complete family be involved in such a horrendous crime? and how is this connected to a dope user in california or a user in manhattan? i believe it is not. i believe there's the wider social issue that is at stake here. it has to do with dysfunction.
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it has to do with people that will be coming to continue on the path that they have for generations. >> suarez: has it been tougher to ask your journalists to go out into the field and cover this when you know they're taking their lives into their hands? >> well, i must tell you that i have a lot of respect and i have a lot of debt to a lot of journalists, a lot of men and women that pay the price, that run the risk. every day they go out there and they know that because we're doing something that is important for our fragile democracy, you know, they continue to do it. but when you walk into the museum in washington and you see the countries of the world there on the map and you see our country, mexico, in red, meaning that there is no freedom of expression, it breaks my heart. it's painful to see that.
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but on the other hand, i must agree because the risk of publishing the truth, of going out and reporting is getting higher. there's higher prices to be paid. there's more risk to be run as we are seeing in the border. they simply stop printing things that relate to organized crime. >> suarez: thanks for joining us. >> thank you, sir. >> woodruff: next, how the world of reading may change for younger students. some big moves could be in store for schools as part of an important experiment around the country, as the newshour's special correspondent for education, john merrow, reports. >> did you bring back something? very good. >> reporter: today almost 15 million public school children
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in kindergarten through third grade are working on their reading. sounding out letters. making meaning out of words. >> a tree that is a.... >> okay. >> reporter: teaching them is big business. billions of dollars are spent every year on books and reading programs. a significant investment with disappoint returns. nationwide 65% of 8th graders are not meeting grade level expectations in reading. more than 600,000 of the nation's students drop out of high school every year, some without ever having become competent readers. the repercussions are enormous for individuals and the country. >> if we're serious about building an economy that lasts, we've got to get serious about education. we are going to have to pick up our games and raise our standards. >> reporter: the question is, how do we raise our standards? the new view is that our kids read too much fiction.
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looks like this. and not enough about things like electricity, whales and the solar system. at least not as much as kids in other countries that are outperforming us on international tests. all that is spelled out here in what's called the common core state standards. new guidelines for what students are expected to learn and what kinds of books they're expected to read. financed with federal money but developed outside of washington, the common core has been adopted by 45 states and the district of columbia. how much will reading programs in our 67,000 elementary schools have to change to get? sync with the common core? we looked at three very different programs to find out. this public school in newark, new jersey, and about three- quarters of the elementary schools in the u.s. are using textbooks called basil readers. >> this story right here, the secret life of trees, is an example of information text. >> reporter: baseal readers go
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back to the mcguffy reader that was introduced in 1836. it paved the way for the popular dick and jane series that dominated schools from the 1930s to the '60s. for decades, readers like this were the only game in town. and they're still popular today because they're cheap, only about $150 per child, and because it's an easy curriculum for new teachers. >> the basal program provides directions and support for teachers who are just coming out of school and who might not have a solid repertoire yet. >> reporter: basal readers teach kids how to read by teaching them comprehension strategies, how to attack a passage. take a paragraph apart to figure out what the author means and so on. >> for one week it might be main idea. the next week it might be focusing on ex-pos tory text. they're focused on skills. >> there is... mark?
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>> enough. >> what can we do to help us when we are not sure of a word? >> reporter: lessons are laid out page by page. second grade teacher sometimes follows the textbook exactly as prescribed. >> they give you a list of questions at the end after we read a story i'll use that as a reading response question that children have to write about that question in their note woox. >> i want you to think about the story and check out the picture. >> reporter: but other times she says basals are not doing the job and her students need more choices. >> if you get a child going astray and they're not picking up on the narratives and the skills that are supposed to come from that story you have to go outside the box and find books that are interesting for them. >> reporter: school districts like basal reader programs because they can use the same books year after year. newark schools have been using their basal series for eight years. but now with the common core's emphasis on non-fiction, some schools will need to buy new editions or at least
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complemental books to keep up with the new standards. that's great for the publishing companies not such good news for schools with tight budgets. >> we can make you a.... >> reporter: at first glance a second approach to teaching reading looks quite different. for one thing there are a lot more books. it's something called balanced literacy. it's used in about 15% of elementary schools nationwide including this school in the bronx in new york city. books cost at least $300 per child, roughly twice as much as the basal approach. instead of everyone reading from the same textbook, students in this program get to choose their own books. every week they pick about a dozen books from bins filled with just-right books compiled by teachers. they read independently or with a partner. just right books. what does that mean? >> it is just right for them. where they're able to read that book fluently,
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independently without any teacher support. >> can you turn to page 5. and find the word colony. i want to point to that word. >> reporter: teachers like this one continually assess their students to determine which books are on their level. >> you guys can begin reading. >> reporter: and there are 26 different levels in all. filling 35 classrooms and the library with choices is not cheap. this year because of the approaching common core, principal amanda bladder had to add lots more non-fiction choices. >> we now have level libraries that are non-fiction in all of our classrooms so the curriculum in reading and writing is now aligning to the common core standards. >> reporter: just like the students using basal textbooks, these first graders are learning reading strategies. >> we're teaching comprehension strategies such as main idea, author's purpose, inferencing, cause and effect. >> reporter: in balanced literacy, comprehension is a skill, something to be practiced like a jump shot or
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dance steps. >> what planet is that? >> and what makes saturn unique? >> reporter: not so here. in this reading program in a school in queens new york the emphasis is on content, the knowledge kids acquire. >> pick your favorite planet. you're going to look back into your reading notebook and write two facts about that planet. >> reporter: ps-96 uses a curriculum called core knowledge developed by a nonprofit organization led by education reformer e.d.hirsch jr. even though the word "core" is in its name it has no affiliation with the national movement. >> saturn is the second biggest planet. saturn has thousands of rings. >> reporter: core knowledge is an outline used by just over 1% of elementary schools. that's only 800 schools. because it's such a small program now, the final cost has not been determined. organizers say it will be less than basal readers.
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joyce bear it walker is principal of ps-96. >> when i initially came to ps- 96 we were not a core knowledge school. we basically used basal readers and balanced literacy. it was a lot of fictional. fictional studies, fictional texts. >> reporter: but the principal was not a fan of basal readers and their emphasis on figure should be. she felt her student needed to know the same thing that children in affluent neighborhoods were learning. >> i felt some of the students didn't have enough prior knowledge. >> reporter: prior knowledge means? >> knowledge that they need to have to, i feel, function in society, to have conversation, just to help them understand who they are as far as their relationship to the rest of the world. core knowledge can be challenging. so you do have to do a lot of training because informational texts are complex. now how do you tear it down so
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that young children and kindergarten and first grade can understand about egyptian civilization? >> reporter: content is king in the core knowledge approach. books are organized by subjects like mythology, mozart and the westward expansion. topics that some say are over the heads of the young readers. i want to know about the books you like to read. apparently nobody told these first graders. >> solar system. a nature book. >> arc archeologist book because it's teaching me more than archeology. >> reporter: the arrival of the common core does not faze principal bear it walker. >> when i look at what the expectations are coming in with the common core learning stand standards it seems we're where we need to be right now. >> reporter: ou how effective are these reading programs? the data for core knowledge in schools like this one in the
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bronx is promising but for basal reading programs, it turns out that savvy teachers use whatever work best. basal readers used in three quarters of our elementary schools will have to make significant adjustments to comply with the emerging core standards. we won't know for years where whether the new common core approach will produce more capable readers but if this national experiment works at the very least our children should emerge knowing a lot more than they can learn from books like curious george and clifford. school systems can look forward to another major challenge. new tests. in school year 2014-2015. >> woodruff: just how big is the education publishing industry? >> woodruff: just how big is the educational publishing industry? learning matters answers that question in a podcast. find a link to their web site on ours. >> brown: finally tonight, an
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unfolding "national emergency" of long-term unemployment. according to labor bureau statistics, some five million americans have been looking for work for more than six months, a percentage of the overall work- force that's grown dramatically in the last several years. two washington policy economists came together in an op-ed in yesterday's "new york times" that called the problem a "human disaster." what made that piece especially interesting is that the two normally come from opposite ends of the spectrum. dean baker is co-director of the liberal center for economic and policy research. kevin hassett is director of economic policy studies at the conservative american enterprise institute, and an advisor to the romney campaign. the op-ed piece was not connected with the campaign. welcome to you both. >> thanks very much. >> brown: the idea of a national emergency. that's your term. >> both of our terms. >> brown: is it a new emergency? >> well, it's a worsening emergency. i mean obviously this is getting worse by the month
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which is one of our points. we've been lucky in a sense that historically it has knots had a big problem with the long term unemployment. if we go back before the downturn, people unemployed for six months were less than 8 tenths of the work force. this is something that's the result of a prolonged downturn. the numbers of long-term unemployed keep going higher. >> brown: who is most affected? who are we talking about? >> what we're seeing is that over time people that have become more affected or most affected are folks that are people above 50 or 60. folks who are younger are more likely to be fired but also more likely to be hired. if you let a long-term unemployment problem run for a few years what you end up with a large group of older workers that have a hard time reattaching. economists can tell you why that is. if a firm brings in a person they have to invest in training somebody. if they're on in age maybe they won't have a big pay back
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period afterwards. >> let me point out the racial aspect as well. you see much higher rates for hispanics and particularly for african-americans. about twice the overall rate. >> brown: one of the things you talk about here is the physical and psychological effects. >> i mean it's chilling. in some ways losing one's job is like having a death in the family. the statistics were shocking to us as we dug into them. the fact is that if somebody loses their job, then in the year after their job, the probability of them dying is 50 to 100% higher. being separated from your job can take about a year-and-a-half after your expected life. there are reasons for that. one is that the suicide rate is higher. right now because of the higher long-term unemployment it's probably the case there are an extra 130 or so suicides a monted because just a terrible stress that people go under when this happens. too many people, too many of us think of our job as our life.
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when you take the job away from someone, you can ta away almost everything. >> brown: you both deal in the world of policy. you point out in this article that neither party was really prepared to deal with this. or has responded adequately. then you talk about examples where there is a sort of response particularly in germany, of work sharing. >> actually kevin and i earlier worked together on this. i think we claimed success. a lot of people don't realize that there was actually a provision in the bill that extended the payroll tax cut that helped or that encouraged states to have more work sharing. >> brown: explain that. >> 23 states have as part of their unemployment insurance program a policy where instead of laying workers are employers can reduce their work hours. say you were going to lay off ten workers instead you have 50 workers work 20% fewer hours. 32 hours a week, say, rather than 40. if you laid the workers off, they get halfway as unemployment benefits. in this case, with work sharing, the government picks up half of their lost wages. they're working 20% fewer
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hours. they're getting paid 10% less. this keeps them on the job gaining skills in touch with the work force with a much less debilitating experience. germany has not had great growth. it's growth as happy roughly the same as ours. it's because they have policies, most importantly work sharing, that keep people on the job encouraging employers to keep them there rather than lay them off. >> brown: this is an idea that can appeal to liberals and conservatives. >> that's how we started working together on the work sharing project. a couple of years ago a find of mine asked me, i speak german. they said why is it so low? i started studying it. dean sent me an email and said we need a program like that in the states. then i started talking to my friends in the republican party. he started talking to his friends in the democratic party. in march i think it was the bipartisan success that is pretty rare. >> brown: is it a success? is it happening enough?
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>> it's a potential success. >> brown: it's a potential success. >> brown: what are the barriers to keep it from disbanding. >> the states have to pick up work sharing programs. if they do, the federal government will help them financially and significantly. >> brown: beyond work sharing, do you see evidence in the world in which you both live of a willingness of left and right to come up with other solutions because here we are of course in another campaign season. >> well i think part of kevin and my motivation was to make sure this stays on the agenda. there should be a sense of urgency about it. we wish we could say here's three things you can do that we know will work. kevin and i went back and forth. what do we think will work? all we can say is there are some things you can try. there's been some success with training programs. we can go down the list. everything we say someone can say what about this or that or that? the important thing is you have a lot of people in really desperate situation. we should be trying. >> the thing i want to add too is that this is kind of a new problem for america. you have to go back to the
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great depression before you see numbers like what we have. what we wanted to accomplish in this piece is to just get everybody thinking about this national emergency. it's time for a manhattan project. my think tank and dean's think tank are pouring a lot of resources into creative ideas to solve this problem. we have people drifting away from society. we see the terrible effect it has on their own lives and even the lives of their children. one study finds if you ask an adull, hey, when you were young, did your dad lose his job? and if he says yes, then he's going to have a salary that's 9% lower today. it has permanent effects on people and their families. what we have to do is study it and come up with ideas. >> brown: what's on the top of your list for possible things to do? >> one of the paths out of unemployment long-term unemployment we've seen some success with is entrepreneurship. people start businesses maybe on e-bay. maybe they'll open up a cart at the mall or maybe the next great idea but there are a lot of barriers to
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entrepreneurship that i think that we could try to fix. for example, if you're on unemployment insurance and you become self employed because you decide to start a business, you can lose your unemployment insurance. we need to think about ways that maybe we could use what's left over in your unemployment insurance to finance a new entrepreneurial idea. >> i point out to kevin 8 out of 10 new businesses fail. the last thing we want to do is for people to take their life's savings and end up throwing it down the rat hole. >> brown: that shows the debate to continue. thank you both. we've been talking about older workers that are hit particularly hard by long-term unemployment trends. a new pbs web site launches tomorrow that's designed for americans over 50. it's called "next avenue," and ta for information about work, health, finances, leisure and caregiving. you can explore beginning tomorrow. find a link on our home page.
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>> woodruff: again, the major developments of the day. the chief investment officer at j.p. morgan chase retired, becoming the first casualty since the bank announced a $2 billion loss. rival party leaders in greece began a last-ditch effort to form a new government. but the uncertainty weighed on markets worldwide. the dow industrials lost 125 points. online, there's a new tool for those pondering retirement. hari sreenivasan explains. hari? >> sreenivasan: it comes from the financial security project at boston college. economics correspondent paul solman dubs the video short, easy to use, occasionally cheesy, but extremely insightful. find out for yourself on his making sense page. on our world page, read about an organization in pakistan working to give women tools to improve their standing in society. all that and more is on our web site, jeff? >> brown: and that's the newshour for tonight. on tuesday, we'll look at how a financial default in greece
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could impact the u.s. economy. i'm jeffrey brown. >> woodruff: and i'm judy woodruff. we'll see you online, and again here tomorrow evening. thank you, and good night. major funding for the pbs newshour has been provided by: >> growing up in arctic norway, everybody took fish oil to stay healthy. when i moved to the united states almost 30 years ago, i could not find an omega-3 fish oil that worked for me. i became inspired to bring a new definition of fish oil quality to the world. today, nordic naturals is working to fulfill our mission of bringing omega-3s to everyone, because we believe omega-3s are essential to life. >> citi. supporting progress for 200 years. >> at&t.
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and with the ongoing support of these institutions and foundations. and... this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. captioning sponsored by macneil/lehrer productions captioned by media access group at wgbh
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PBS News Hour
PBS May 14, 2012 6:00pm-7:00pm EDT

News/Business. Gwen Ifill, Judy Woodruff, Jeffrey Brown. (2012) New. (CC) (Stereo)

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